China hits back with tariffs on U.S. goods after Trump's levies take effect
China to also launch anti-monopoly investigation into Google
China on Tuesday slapped tariffs on U.S. imports in a swift response to new U.S. duties on Chinese goods, renewing a trade war between the world's top two economies even as President Donald Trump offered reprieves to Canada and Mexico.
Additional 10 per cent tariff across all Chinese imports into the U.S. came into effect at 12.01 ET after Trump repeatedly warned Beijing it was not doing enough to halt the flow of illicit drugs into the United States.
Within minutes, China's Finance Ministry said it would impose levies of 15 per cent for U.S. coal and LNG (liquefied natural gas) and 10 per cent for crude oil, farm equipment and some autos. The new tariffs on U.S. exports will start on Feb. 10, the ministry said.
China also said it was starting an anti-monopoly investigation into Google, while including both PVH Corp, the holding company for brands including Calvin Klein and Tommy Hilfiger, and U.S. biotechnology company Illumina on its "unreliable entities list."
Separately, China's Commerce Ministry and its Customs Administration said it is imposing export controls on tungsten, tellurium, molybdenum, bismuth and indium to "safeguard national security interests."
China controls much of the world's supply of such rare minerals, which are critical for the clean energy transition.
'Fairly modest' measures, for now
Capital Economics, a U.K.-based research firm, estimated that China's additional tariffs would apply to about $20 billion US of annual imports, compared with the $450 billion worth of Chinese goods subject to the Trump tariff.
"The measures are fairly modest, at least relative to U.S. moves, and have been calibrated to send a message to the U.S.," Julian Evans-Pritchard, the firm's head of China Economics, said in a note.
But forecaster Oxford downgraded its China economic growth forecast, saying "the trade war is in the early stages" and further tariffs were likely.
During his first term in 2018, Trump initiated a brutal two-year trade war with China over its massive U.S. trade surplus, with tit-for-tat tariffs on hundreds of billions of dollars worth of goods upending global supply chains and damaging the world economy.
Trump warned he might increase tariffs on China further unless Beijing stemmed the flow of fentanyl, a deadly opioid, into the United States.
"China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," he said on Monday.
China has called fentanyl America's problem and said it would challenge the tariffs at the World Trade Organization and take other countermeasures, but also left the door open for talks.
Fines, sanctions possible for targeted companies
Companies added to China's blacklist can be subject to fines and a broad range of other sanctions, including a freeze on trade and revocation of work permits for foreign staff.
China's State Administration for Market Regulation said Google was suspected of violating the country's anti-monopoly law and an investigation was initiated in accordance with the law. It did provide further details on the investigation or on what it alleged Google had done to breach the law.
Google products such as its search engine are blocked in China and its revenue from there is about one per cent of global sales. Google announced the launch of a small artificial intelligence centre in China, but the project was disbanded two years later, according to the company.
Google still works with Chinese partners such as advertisers.
Google declined to comment. PVH and Illumina did not respond to requests for comment outside regular U.S. business hours.
PVH had already been under scrutiny from Chinese regulators over "improper" conduct related to the Xinjiang region.
The farm equipment measures could impact firms such as Caterpillar and Deere & Co.
The 10 per cent duty China announced on electric trucks imported from the U.S. could apply to Elon Musk's Cybertruck, a niche offering Tesla has been promoting in China. Tesla had no immediate comment.
The U.S. is a relatively small source of crude oil for China, accounting for 1.7 per cent of its imports last year, worth about $6 billion US.
In 2019, Beijing slapped punitive tariffs on U.S. LNG, retaliating for Washington's increase in tariffs on Chinese goods. The stakes are higher now, with China importing 4.16 million tons of U.S. LNG in 2024 worth $2.41 billion, nearly double 2018 volumes.
Trump on Monday suspended his threat of 25 per cent tariffs on Mexico and Canada at the last minute, agreeing to a 30-day pause in return for concessions on border and crime enforcement with the two countries.
"Unlike Canada and Mexico, it is clearly harder for the U.S. and China to agree on what Trump demands economically and politically. The previous market optimism on a quick deal still looks uncertain," said Gary Ng, senior economist at Natixis in Hong Kong.
China dominant in rare metals
China is the leading producer for most of the minerals, and in some cases the U.S. is no longer involved in mining or processing them.
China is the top global producer of both tungsten and indium, and a major producer of tellurium, bismuth and molybdenum.
Tungsten is primarily used in the production of goods including artillery shells, armour plating and cutting tools. Indium is a vital part of phone screens and TV displays, via a refined product called indium tin oxide. A separate indium product is also used in fibre-optic technology.
The expansion of fifth-generation (5G) cellular networks has led to greater demand for indium.
Tellurium, usually a byproduct of copper refining, is used across metallurgy, solar panels, memory chips and other products. Bismuth is used in solders, alloys, metallurgical additives, medications and atomic research.
Molybdenum is primarily used to strengthen and harden steel alloys, making them more resistant to heat and corrosion. It is also used in lubricants, pigments, and as a catalyst in the petroleum industry.
Corrections
- An earlier version incorrectly stated that the minerals cited in China's tariff announcement were of the rare earth classification.Feb 04, 2025 9:41 AM EST